The NAFTA talks are much in the news these days. But rather than discuss the politics of the negotiations, I wanted to examine the possible implications of the talks on Canada’s auto industry and agriculture, the two hot button trade issues on the table.
These two sectors of our economy are so crucial to our wellbeing that they – and other key drivers of our economy – have been the subject of an important research study initiated by the C.D. Howe Institute1. The findings are speculative rather than definitive, but they make disturbing reading.
We have refreshed our SU estimates and have taken down cash flows, largely coming from oil sands.
Consensus estimates have SU’s 2018E CFPS at $5.45/sh. Using a similar price deck to the Street (US$55/bbl WTI, $0.80 FX, $16/bbl WTI-WCS discount, US$17/bbl NYH 321 crack spreads) our current estimate is $4.69/sh (down 12% from our previous estimate at the noted price deck).
Using strip pricing (US$56.54/bbl WTI, $0.79 FX, $16.94/bbl WTI-WCS discount, US $19.65/bbl NYH 321 crack spreads) our 2018E CFPS estimate is now $5.40/sh (~1% lower than consensus but with a more aggressive price deck).